Tri-State Today
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Tri-State Today
Tri-State’s wholesale rates to its members have increased 56% since 2005, and are now 28% higher than Colorado’s other major power provider Xcel Energy's wholesale rates.
• Tri-State has committed to close all of its Colorado coal operations, but still relies heavily on coal from Wyoming for its energy production, while prices for solar, wind, natural gas, and energy storage are declining rapidly.
• Due to recent record-setting low prices for renewable energy, many of Colorado’s largest utilities have announced major plans to take advantage. For example, Xcel Energy has committed to a nearly 60% renewable portfolio by 2030 and 100% carbon-free by 2050. We need Tri-State to do the same.
• Colorado law now requires that Tri-State transition to renewable energy, and Tri-State’s Responsible Energy Plan states that Tri-State has committed to 50% of its energy to come from renewables by 2050. Tri-State recently announced in response to pressure from member-owners that it would commit to reducing its carbon emissions by 80% from 2005 levels across Tri-State territory by 2030. This means that it will get 59% of its energy from renewable sources, but 23% will still come from coal-fired power plants.
• Tri-State states that 30% of the electricity consumed by Tri-State co-op members comes from renewable resources. Yet, less than 5% of the power consumed by Tri-State members comes from solar even with the recently announced addition of a new 100MW project. Most of the rest of Tri-State’s “renewable energy” comes from old, large federal dam projects that do not qualify as renewable under the Colorado Renewable Energy Standard
• Because of Tri-State’s reliance on coal, and because of its heavy debt load, citizens of rural Colorado are paying higher electricity bills. Price forecasts from a wide variety of sources indicate continued cost declines for solar, wind, and storage in coming years, while costs for coal-fired power are expected to rise. This is true even without an existing price on carbon emissions, which we may see in the near future, and the potential cleanup costs associated with coal ash and other pollutants associated with the mining and burning of coal.
• Two of the largest coops in Tri-State Territory, La Plata Electric Association (LPEA) and United Power, are looking at exercising their right to opt out of their long-term contracts with Tri-State in order to meet the needs of their members for cheaper, cleaner, more local, and reliable energy. Like Delta Montrose Electric and Kit Carson Electric, who have already successfully bought out of their Tri-State contracts— these two coops are seeking to leave Tri-State whole, meaning they want a fair exit price that will not burden the remaining coops. Both LPEA and United are currently in legal challenges with Tri-State to determine a fair exit fee, rather than the excessive fees proposed by Tri-State. Denying these coops a fair exit fee that covers the coop’s share of Tri-State’s debt ultimately hurts local governments, businesses, and citizens by locking them into more expensive, dirtier power while restricting local clean-energy economic development.
Tri-State Contracts
Tri-State is a cooperative, owned exclusively by its 42 members, (which are made up of 1.3 million members/customers) each of which is committed to Tri-State through a contract for generation and transmission—that is, Tri-State provides coops with power, and Tri-State also owns the lines over which that power is delivered.
All of the contracts are very long term: 30-40 years left on 50-year contracts. The contracts limit the amount of energy a coop can generate on its own. The contracts usually state that a coop has the option to negotiate an exit if the coop deems that it is in its best interest to do so. Some coops would like the option of getting out of the contract in a way that does not harm other members.
In order for a coop to leave Tri-State and receive power from a different provider (or generate its own), they must negotiate a break from the contract. That negotiation should result in a price that is fair and does not burden the remaining members. The cost of exiting Tri-State should be calculated based on that coop’s share of Tri-State’s debt, minus the value of assets that Tri-State owns specifically for that coop.
In order to initiate an exit from Tri-State, a coop must first request a “shopping letter” from Tri-State, which allows the the coop to start requesting bids from other power suppliers. San Miguel Power and Mountain View Electric have requested such letters but have not yet been granted those. And then Tri-State has to give the coop an exit price.
Two coops have already exited the Tri-State “family”: Kit Carson, and Delta Montrose. Kit Carson’s exit price was $37 million. DMEA’s exit fee was $88.5 million (check this), including $26 million for purchase of facilities, and separately forfeit $48 million in patronage capital.
Two coops are in the “shopping” phase of breaking contracts: La Plata Electric Association and United Power. Neither have been given an exit price. In the past, the Tri-State board has negotiated the exit fee. But La Plata and United are attempting to prove that such negotiations have happened in bad faith, and are requesting intervention from the Colorado Public Utilities Commission.
An administrative law judge at the Colorado Public Utility Commission ruled on complaints filed by LPEA and United Power and agreed that Tri-State’s refusal to provide an exit fee to the two rural electric cooperatives amounted to unjust and unreasonable behavior. The judge also notedTri-State’s strategy of attempting to thwart the PUC of its jurisdiction over exit charges by asking to be regulated by the Federal Energy Regulatory Commission (FERC).
FERC
In September 2019, Tri-State added a new member: California-based MIECO, a subsidiary of Marubeni Corp., which supplies gas to Tri-State power plants. Tri-State asserted that this addition would move Tri-State from respective state Public Utilities Commission jurisdictions to Federal Energy Regulatory Commission (FERC) jurisdiction.
Whether the PUC or FERC will set exit fees is still being fought in the courts.